CHINESE stage companies, theaters and concert halls are struggling financially in the wake of the central government’s campaign to rein in institutions’ indulgent spending although Shanghai has bucked the overall trend.

According to the 2013 annual report on China’s performance market, released by China Association of Performing Arts, the market was worth 46.3 billion yuan (US$7.4 billion) last year, down 9 percent from the previous year.

Last year’s box-office revenue dropped 2.9 percent while income from government subsidies, sponsorships, derivative products and other services dropped 9.6 percent, the report said.

In 2012, the central government called on state-owned enterprises and all levels of government to cut unnecessary spending on parties, hiring entertainers and various ceremonies.

The Beijing Times reported several big performance companies and theaters in the capital city that relied on government and state-owned companies are enduring financial problems while many small performance companies have shut down.

However, the Shanghai market remains fairly prosperous and several theaters and performance groups say the government’s policy has had little or no effect on business.

Shanghai Oriental Art Center says its yearly income increased 18 percent in 2013 from 2012, adding it has given 5.6 percent more performances in the first six months of this year, compared with the previous one. It also says income in the period is up 5.3 percent year on year.

Although Shanghai Grand Theater was closed for 10 months last year due to renovations, spectators were quick to snatch up tickets for a variety of shows once it reopened in November 2013. Tickets for a New Year’s concert by a Spanish orchestra and the play “The Last Laugh” sold out far ahead of their opening nights.

The Shanghai Symphony Orchestra says ticket sales have risen an average of 10 percent annually since 2009. The orchestra plans to open its own concert hall this September, indicating its confidence in the market.

Shanghai Concert Hall’s latest season concluded this month and although figures are not yet available, it says there was a steady increase in ticket sales.

Shen Yanshu, director of public relations for Shanghai Concert Hall, says the government policy did have some negative influence, “but nothing major.” He says there was no title sponsor for the series of New Year’s concerts this year and companies canceled reservations for year-end parties.

Still, it hasn’t been too bad due to the nature of Shanghai’s market.

“The performance market in Shanghai is quite different from that in other parts of China,” says Shen. “Individuals make up the bulk of customers in Shanghai, whereas different government departments, companies and other organizations are the main ticket buyers in other provinces.”

Most theaters in Shanghai say somewhere between 80 and 90 percent of their customers are individuals and group ticket purchases rarely exceed 30.

Zhang Xiaoding, vice president of Shanghai Grand Theater, says the emphasis among theater companies in the city is to provide good shows that people want to see.

“We earn our reputation by offering high-quality performances rather than ‘fireworks projects’ that are only intended to satisfy high officials,” Zhang says. “With our lineup of performances, I don’t think the call on frugality among officials will affect our customers too much.”

Other venues agree with Zhang’s point of view, but also caution that proper marketing is crucial to ensuring tickets are sold for each performance. Launching education programs to popularize the arts, providing low-cost tickets to attract spectators and tracking audience feedback are key ways in expanding the base of potential customers.

Shen says the steady growth of performance income can be seen as a natural result of efforts to build a bigger customer base over the years.

Though most theaters in Shanghai have taken pride in expanding the market, Shanghai Symphony Orchestra, a 135-year-old performance group, has endured some tough times since 1998, when it decided to become market-oriented.

Almost all state-owned performance groups at the time cared little about their product as they received sufficient financial support from the government, says Chen Guangxian, president of Shanghai Symphony Orchestra.

Chen recalls how they had only a staff of three to sell tickets before 1998. All they did was send tickets to nearby universities. None of the concerts sold well and tickets for some big-name concerts were ridiculously cheap, he says.

“That is not how art should work,” Chen adds. “Setting up a promotion department was the first step to changing the situation.”

A series of marketing methods similar to that of the other theaters helped the orchestra increase its annual income to 20 million in 2009, up from only several hundred thousand back in 1998.

Though the orchestra still receives financial support from the government, it only accounts for about 17 percent of its revenue. The rest is from ticket sales and donations by the Shanghai Symphony Orchestra Council, which is similar to how many Western orchestras operate.

Chen says the transition difficulties have been worth it as the orchestra is now a valuable member of the city’s music and cultural scenes.

Zhang remains upbeat about the future.

“I don’t think the policy is completely negative for the performance market. Temporary pain may help the market enter a more virtuous circle,” Zhang says. “Only those with good products will survive while customers will get better services.”